UGC NET Commerce Legal Aspects of Business Syllabus

What is meant by 'co-extensive liability of a surety'?

Under Section 128, the surety's liability is co-extensive with that of the principal debtor — i.e., the surety is liable for the same amount/extent as the principal debtor, unless the contract provides otherwise.

Define a 'contract of bailment' and name the parties.

Bailment (Sec 148) is the delivery of goods by one person to another for some purpose, on a contract that the goods shall be returned or disposed of as directed when the purpose is accomplished. Parties: bailor (delivers) and bailee (receives).

Define 'pledge' and name the parties.

Pledge (Sec 172) is the bailment of goods as security for payment of a debt or performance of a promise. The bailor is the pawnor and the bailee is the pawnee.

Distinguish between bailment and pledge.

In bailment, goods are delivered for a purpose (e.g., repair, safekeeping) and the bailee cannot sell them. In pledge, goods are delivered as security for a debt, and the pawnee can sell them after notice on default.

What is a particular lien versus a general lien in bailment?

A particular lien (Sec 170) lets the bailee retain only those specific goods on which labour/skill was applied until paid. A general lien (Sec 171) allows certain persons (bankers, factors, attorneys, policy brokers) to retain any goods for a general balance of account.

Who is an 'agent' and who is a 'principal' under the Contract Act?

An agent (Sec 182) is a person employed to do any act for another or to represent another in dealings with third persons. The principal is the person for whom such act is done or who is so represented.

What is the doctrine of 'ratification' in agency?

Ratification (Sec 196) is the subsequent adoption/acceptance by a principal of an act done by another on his behalf without authority. Once ratified, it relates back to the original act as if originally authorised.

How may an agency be terminated under the Contract Act?

By revocation by principal, by renunciation by agent, by completion of business, by death/insanity of principal or agent, by insolvency of principal, or by expiry of time. An agency coupled with interest cannot be revoked to the prejudice of that interest.

Differentiate between a 'sale' and an 'agreement to sell' under the Sale of Goods Act, 1930.

In a sale, property in goods passes immediately to the buyer (executed contract). In an agreement to sell, transfer is to take place at a future time or on fulfilment of a condition (executory contract). Risk follows ownership only in a sale.

Distinguish between a 'condition' and a 'warranty' under the Sale of Goods Act.

A condition (Sec 12) is a stipulation essential to the main purpose of the contract; breach allows repudiation. A warranty is collateral to the main purpose; breach gives only a right to claim damages, not to reject goods.

State the doctrine of Caveat Emptor under the Sale of Goods Act.

Caveat Emptor means 'let the buyer beware' (Sec 16) — the buyer must check goods before buying; the seller is not bound to disclose defects. The buyer alone bears the risk of his choice.

Name two important exceptions to the doctrine of Caveat Emptor.

(1) Where the buyer relies on the seller's skill/judgement for a particular purpose (implied condition of fitness); (2) where goods are sold by description and must be of merchantable quality. Also: sale by sample, usage of trade, and fraud/concealment by seller.

Who is an 'unpaid seller' under Section 45 of the Sale of Goods Act?

A seller is unpaid when (a) the whole price has not been paid or tendered, or (b) a bill of exchange/other negotiable instrument received as conditional payment has been dishonoured.

What rights does an unpaid seller have against the goods?

Right of lien (retain possession), right of stoppage in transit (if buyer is insolvent), and right of resale. Against the buyer personally: suit for price and suit for damages for non-acceptance.

What remedies does a buyer have against the seller under the Sale of Goods Act?

Suit for damages for non-delivery, suit for specific performance, suit for breach of warranty (damages or price reduction), suit for recovery of price already paid, and suit for interest/special damages.

Define a 'negotiable instrument' under the Negotiable Instruments Act, 1881.

A negotiable instrument means a promissory note, bill of exchange, or cheque payable either to order or to bearer (Sec 13), freely transferable by delivery or endorsement and conferring a good title on a bona fide holder for value.

Distinguish between a promissory note, a bill of exchange, and a cheque.

A promissory note (Sec 4) is an unconditional written promise by the maker to pay. A bill of exchange (Sec 5) is an unconditional written order by the drawer directing the drawee to pay. A cheque (Sec 6) is a bill of exchange drawn on a banker payable on demand.

Who is a 'holder in due course' under the Negotiable Instruments Act?

A person who, for consideration, becomes the possessor/payee of a negotiable instrument before maturity, in good faith and without notice of any defect in the title of the transferor (Sec 9).

Differentiate between negotiation and assignment of a negotiable instrument.

Negotiation transfers an instrument by delivery or endorsement so the transferee becomes a holder (possibly holder in due course) free of prior defects. Assignment transfers rights by a separate written deed; the assignee takes subject to all defects in the assignor's title and gets no better title.

What is 'endorsement' and name its main kinds.

Endorsement is signing on the back/face of an instrument to negotiate it. Kinds: blank (general), full (special), restrictive, partial, conditional/qualified, and sans recours (without recourse).

What is meant by 'dishonour' of a negotiable instrument?

Dishonour occurs by non-acceptance (refusal of a bill by the drawee) or by non-payment (failure to pay on maturity/presentment). The holder must usually give notice of dishonour to charge prior parties.

What are 'noting' and 'protest' in relation to dishonour of a bill?

Noting is the authenticated minute recorded by a notary public on a dishonoured instrument as proof of dishonour. Protest is the formal certificate issued by the notary attesting the dishonour.

How is a negotiable instrument discharged?

By payment in due course, by cancellation, by release of parties, by allowing more than 48 hours to accept, by material alteration, by negotiation back to the acceptor, or by operation of law (e.g., insolvency).

Define a 'company' and state its essential characteristics.

Under the Companies Act, 2013, a company is an artificial legal person created by law with a separate legal entity, perpetual succession, common seal (optional), limited liability, transferable shares, and capacity to sue and be sued in its own name.

Explain the principle established in Salomon v. Salomon & Co. Ltd.

It established that a company has a separate legal personality distinct from its members/shareholders. The company's debts are its own, and members enjoy limited liability even if one person effectively controls the company.

Classify companies on the basis of liability of members.

(1) Company limited by shares, (2) company limited by guarantee, and (3) unlimited company. (On incorporation basis: chartered, statutory, registered; on members: private, public, one-person company.)

Differentiate between a private company and a public company under the Companies Act, 2013.

A private company restricts share transfer, has a minimum of 2 and maximum of 200 members, and cannot invite the public to subscribe. A public company has a minimum of 7 members (no maximum) and can freely invite public subscription and transfer shares.

What are the main documents/stages required for the formation of a company?

Promotion, incorporation (filing Memorandum of Association, Articles of Association, and obtaining Certificate of Incorporation), and (for public companies raising capital) commencement of business via declaration. SPICe+ form is used for registration.

Distinguish between the Memorandum of Association and the Articles of Association.

The Memorandum (MoA) is the charter defining the company's scope/powers and its relation with outsiders (object, name, capital, liability clauses). The Articles (AoA) are internal rules/regulations for management. The AoA is subordinate to the MoA.

What is the doctrine of 'ultra vires' in company law?

Any act done by a company beyond the powers/objects stated in its Memorandum is ultra vires (beyond powers) and is void; it cannot be ratified even by all shareholders. It protects creditors and investors.

What are the main types of company meetings?

Annual General Meeting (AGM), Extraordinary General Meeting (EGM), Board meetings, and class meetings. Key concepts: quorum, proxy, ordinary resolution (simple majority) and special resolution (3/4 majority).

What are the modes of winding up a company under the Companies Act / IBC?

Winding up may be (1) by the Tribunal (compulsory, e.g., for inability to pay debts or just-and-equitable grounds) and (2) voluntary winding up. A liquidator realises assets, pays creditors, and distributes any surplus to members.

What is a Limited Liability Partnership (LLP) and its key features?

An LLP (LLP Act, 2008) is a body corporate combining features of a partnership and a company: separate legal entity, perpetual succession, limited liability of partners, and no partner is liable for another partner's misconduct. Minimum 2 partners, no maximum limit.

State the procedure for formation of an LLP in India.

Obtain Digital Signature Certificate (DSC) and DIN/DPIN for designated partners, reserve name (RUN-LLP/FiLLiP), file incorporation form FiLLiP with the Registrar, obtain the Certificate of Incorporation, and file the LLP Agreement (Form 3) within 30 days.

What are the main objectives and provisions of the Consumer Protection Act, 2019?

To protect consumer interests through six rights (safety, information, choice, to be heard, redressal, consumer education). It establishes the CCPA, a three-tier redressal system (District, State, National Commissions), and provisions on product liability, unfair trade practices, and e-commerce/misleading ads.

What is the objective and key feature of the Competition Act, 2002?

To prevent practices having an adverse effect on competition, promote and sustain competition, protect consumer interests, and ensure freedom of trade. It prohibits anti-competitive agreements and abuse of dominant position, and regulates combinations (mergers) through the Competition Commission of India (CCI).

What are the main objectives of the Information Technology Act, 2000?

To give legal recognition to electronic records and digital signatures, facilitate e-commerce and e-governance, and provide a framework to prevent cyber crimes and adjudicate cyber offences.

Give examples of cyber crimes and penalties under the IT Act, 2000.

Tampering with computer source documents (Sec 65), hacking/identity theft (Sec 66, 66C), publishing obscene material (Sec 67), and cyber terrorism (Sec 66F). Penalties range from fines to imprisonment (up to life imprisonment for cyber terrorism).

What is a digital signature under the IT Act and what does it ensure?

A digital signature is an electronic authentication of a record using asymmetric cryptosystem and hash function. It ensures authenticity, integrity, and non-repudiation of electronic documents and is legally recognised (Sec 3).

What is intellectual property and what are its main forms in India?

Intellectual property refers to creations of the mind protected by law. Main forms: patents, trademarks, copyrights, designs, geographical indications, and trade secrets.

Differentiate between a patent, a trademark, and a copyright.

A patent protects new inventions (term 20 years). A trademark protects brand identifiers like logos/names (renewable every 10 years). A copyright protects original literary, artistic, musical, and software works (generally author's life + 60 years in India).

What is the term of protection and governing law for patents in India?

Patents are governed by the Patents Act, 1970, and protected for 20 years from the date of filing, subject to payment of renewal fees. After expiry, the invention falls into the public domain.

Name some emerging issues in intellectual property rights.

Protection of software and AI-generated works, patenting of biotechnology/genes, digital piracy and copyright in the internet age, traditional knowledge and biopiracy, domain name disputes, and balancing IP rights with public health (compulsory licensing of medicines).

What are the main objectives and provisions of the Right to Information (RTI) Act, 2005?

To promote transparency and accountability in public authorities by empowering citizens to seek information. It provides for Public Information Officers, time-bound responses (generally 30 days), and Information Commissions (Central and State) as appellate bodies.

What is the Goods and Services Tax (GST) and when was it implemented in India?

GST is a comprehensive, destination-based, multi-stage indirect tax levied on the supply of goods and services, with credit of taxes paid at previous stages (input tax credit). It was implemented in India on 1 July 2017.

What are the main benefits of GST?

Removal of cascading effect (tax on tax), one nation-one tax-one market, simplified compliance, seamless input tax credit, wider tax base, reduced logistics/transit costs, boost to GDP and exports (zero-rated), and increased transparency.

Explain the dual GST model adopted in India.

India follows a dual GST where both the Centre and States levy tax on a common base. On intra-state supply, CGST (Central) and SGST/UTGST (State/UT) are levied simultaneously; on inter-state supply, IGST (Integrated GST) is levied by the Centre and shared with states.

How is the input tax credit (ITC) set-off mechanism applied under GST?

IGST credit is used first against IGST, then CGST, then SGST. CGST credit is used against CGST and then IGST (not against SGST). SGST credit is used against SGST and then IGST (not against CGST). CGST and SGST credits cannot be cross-utilised.

What is the role of the GST Council in the implementation of GST?

The GST Council (Article 279A) is the apex body chaired by the Union Finance Minister with state finance ministers as members. It recommends tax rates, exemptions, threshold limits, model GST laws, and resolves implementation issues to ensure uniformity.